On the fifth anniversary of the Flash Crash, I sat down with SEC Commissioner Dan Gallagher to talk about what changes have been made to the way trading has been conducted since then.
The conversation quickly turned to Dodd-Frank.
Why the sudden left turn? Because the SEC staff has been consumed by writing rules for Dodd-Frank for the past four years, practically to the detriment of everything else, and it's not over, not by a long shot.
Gallagher wants to spend more time on strengthening the trading system, but Dodd-Frank is taking up all the time.
"These are all hugely important things that are critical to the agency, but we're not spending time on them because we're doing silly rules like some of the ones we've been handling the last couple of months. Dodd-Frank has been an awful distraction to the agency, and I'm hoping that, although it's the law of the land and we have to implement the remaining 50 percent, that we can prioritize other, more important things ahead of it," Gallagher said.
"This is my fourth year as commissioner, I've been on the staff before, and I can tell you in the past four years we are somewhere between 10 and 20 times the number of normal rule writing capacity," Gallagher told me.
To back up his point, he starts reeling off statistics: 2,319 pages of legislation that has produced roughly 400 mandates to regulators. These must be turned into rules, which requires staff to write, research, and evaluate them.
"We'll be doing this for another five, ten years," he said.
What has this done to the SEC? I assumed the staff has increased to deal with the additional rulemaking burden.
"It's increased but not commensurate with the burdens that Dodd-Frank placed on us. And really, to me, Bob, the burden isn't necessarily as much as the regulations that came from Dodd-Frank. Some of them are just completely nonsensical. I mean, nothing to do with the financial crisis, aren't really germane to the function of the SEC and that's what happens when you get a runaway piece of legislation."
Tell me how you really feel, Dan.